So what are the potential costs and trade-offs for the public sector associated with P3s? The GAO report identified several of those as well, including:
• Road users pay tolls, regardless of whether the collector is in the private sector or the public sector. Road users may see higher tolls under private operation.
• The public may give up more than it gains if the tolls over time exceed the value of the upfront payments from the private entity.
• Because of the way contracts are structured to put off toll increases, future road users could end up paying higher tolls to support current road benefits. That may result in what the GAO calls intergenerational inequities.
• Not all risks can or should be shared, for example environmental and political ones.
• States may have to cede some control through non-compete provisions and toll rate setting. Noncomplete provisions are designed to limit competition from or elicit compensation for highways or other transportation facilities that may compete and draw traffic from a leased toll road.14
Critics have raised a number of concerns about public-private partnerships in recent years. The Reason Foundation, a libertarian public policy research organization that supports P3s, analyzed these concerns, including:
• Many of the private toll road companies involved in P3 agreements are foreign companies. Proponents point out, however, that until recently the U.S. has used only public sector agencies to build and operate toll roads. The companies with the most proven track record are still those from Europe and Australia, which have been using P3s in transportation for decades.
• The lengths of the agreements are too long and state governments are committing future generations when the transportation needs of tomorrow, including the viability of the roads and their usage, can't be predicted. But, proponents say, state governments already commit taxpayers for long periods when they use bonding to pay for infrastructure. Moreover, concession agreements can be written with provisions that permit changes during their term.
• Some concession agreements contain noncomplete clauses to prevent the construction or improvement of parallel, non-tolled roads that could provide competition for the tolled road. However, such clauses have evolved in recent years after outright bans on alternative competing roads proved flawed, unnecessary and unpopular. Recent agreements more widely define what the state may build and generally allow the construction of everything in its current long-range transportation plan.
• Toll road leasing can lead to higher tolls. While this is often true, toll rates may have been too low when the road was under state control. In Indiana's case, tolls on the Indiana Toll Road had not been increased in 20 years and the impact of inflation meant the cost of collecting the toll was greater than the amount of the toll payment. Moreover, when state governments face a financial crisis, they are sometimes forced to increase tolls by a high percentage all at once. Private toll companies, on the other hand, can raise tolls each year by a single digit percentage to keep up with inflation, which is ultimately less disruptive for regular toll payers. It also may be less disruptive for state officials since they don't have to approve the toll increase and potentially face the political consequences.
• Americans already pay for roads through taxes and shouldn't have to also pay a private company for roads through tolls. Most toll roads were actually financed with little or no tax-based grant money, but instead were financed with loans based on prospective toll revenues. Moreover, analysts point out, roads are never fully paid for because they require periodic maintenance, reconstruction and widening.15